June 7, 2011
The Top 3 Drivers For Supply Chain Visibility
Over the past several years, we at InfinityQS have seen countless examples of manufacturers who are challenged to improve the quality of the materials coming from the supply chain. As a quality control software company, our mission to help clients improve product quality is no longer limited to the production floor. No matter how tightly our customers can manage their processes to proactively control quality, they are still faced with a series of challenges if the components that they are receiving from their suppliers aren’t meeting specifications.
Obviously, the sooner a quality issue is detected within a supplier’s product the better. But even if the supplier notices the issue during end-of-line inspection and never ships the product, there is still a cost to both the supplier and the manufacturer. It’s becoming more and more critical for manufacturers to work with suppliers to ensure the quality of the materials that they are producing.
What’s driving this shift? Why is supply chain quality more of a focus for manufacturers today than it was five or ten years ago? Here are some of the drivers that we’ve seen first-hand from working with thousands of manufacturers, large and small, and across all industries.
1. Globalization. Manufacturing is no longer limited to the four walls of the plant and businesses are saving money by purchasing materials from suppliers all over the globe. These manufacturers are sometimes relying on hundreds or even thousands of suppliers to deliver components that will eventually carry their brand name.
Real-time visibility is crucial because manufacturers can’t rely solely on Certificates of Analysis (COAs) for assurance that the product meets specifications. In fact, at our user conference last October, I asked a room of 100+ quality management professionals if they trusted that the products they were receiving were usable based on COAs. Nearly everyone raised their hand to indicate that COAs were not sufficient to indicate that the product met specifications.
2. Recalls. Product recalls are making headlines on a regular basis. Not only are they costing manufacturers billions of dollars annually, but they are wreaking havoc on well-established brands. Toyota, Johnson & Johnson, and numerous food brands have all been tarnished by recalls that were due to supplier quality issues.
The challenge is the lack of real-time collaboration on how components need to be manufactured to meet requirements. More specifically, a lack of real-time visibility into suppliers’ manufacturing processes is preventing this level of collaboration from occurring. Without being able to see the measurement data on key characteristics, there is no way to know if the product is being built to spec.
3. Lean Manufacturing. Companies are gaining a competitive advantage by running leaner manufacturing operations. As part of these lean initiatives, manufacturers are picking and choosing their suppliers more carefully, and instead of having multiple suppliers for the same component, there may be only one or two. Instead of threatening to use another supplier if the quality is unacceptable, manufacturers are trying to work more collaboratively with their select suppliers to ensure that they are meeting requirements and the product is usable.
The ability for suppliers to share real-time production data with their customers allows suppliers to optimize their processes as well. Using predictive analysis tools, such as Statistical Process Control, both the supplier and the customer can determine if a product is at risk for being defective before it’s even produced. The supplier can make process adjustments based on the analysis which will avoid having to scrap or rework materials. The cost savings are advantageous to both parties, contributing to overall lean operations.
To sum up, there are a variety of factors that are driving the need for enhanced collaboration with suppliers, facilitated by real-time visibility onto the production floor. Our customers who are using our ProFicient on Demand product are gaining a competitive advantage through this type of collaboration. What is your business doing to manage supplier quality?